IBBI suspends Insolvency Professionals for 2 years as on Failure to Discharge Duty under Insolvency Bankruptcy Code

The Insolvency and Bankruptcy Board of India(IBBI) suspended the Insolvency Professionals for 2 years due to Failure to Discharge Duty under the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017. In compliance of the directions of Hon’ble High Court of Bombay vide its Order dated 18th July 2023, after giving fresh notice of personal hearing, disposes the Show Cause Notice (‘SCN’) issued to Mr Partha Sarathy Sarkar, who is an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (‘Board/IBBI’). The Disciplinary Committee of IBBI (“DC”) had suspended the registration of Mr. Partha Sarathy Sarkar for a period of three years. In compliance with the directions of the Bombay High Court, the notice of a fresh hearing was sent to Mr Partha Sarathy Sarkar for a personal hearing before the DC. He appeared along with his advocate Mr. Pratik Sarkar for personal hearing. Mr. Partha Sarathy Sarkar, at the outset, questioned the legality and validity of the fresh hearing. The SCN was issued to the IP on 08th April 2022 and subsequently, the Order was passed on 24th June 2022, i.e. well within the timelines provided under Regulation 13(2) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017. The IBBI, appointed an Inspecting Authority (‘IA’) vide order to conduct the inspection of the IP in his assignment in Corporate Insolvency Resolution Process (‘CIRP’) of the Corporate Debtor - Innovari Technologies Private Limited ( ‘CD’), on having reasonable grounds to believe that Mr Partha Sarathy Sarkar had contravened provisions of the Code and Regulations. Based on the findings of the IA, the SCN was issued to the IP on 8th April 2022, substantiating the allegations against the IP and seeking his response to show cause as to why suitable action including cancellation of registration should not be taken against him. The IP vide his letter dated 29th April 2022 replied to the SCN. The IP was also provided with an opportunity for a personal hearing before the DC which was scheduled for 15th June 2022. However, the IP did not turn up for the hearing and subsequently informed us that he had not received the VC link for the personal hearing. However, the electronic record reflects otherwise that the notice was indeed served on him through his registered email id. Notwithstanding the same, one more opportunity was provided to the IP for a hearing. However, he again opted to stay away from the proceedings. As it being the second and last chance accorded to him, Mr. Partha Sarathy Sarkar was requested vide e-mail to make himself available to attend a personal hearing virtually. He neither responded nor turned up to participate in the DC proceedings. Accordingly, after examining the allegations made in the SCN, material available with the Board and submissions made by the IP, the DC passed the Order dated 24th June 2022 thereby suspending his registration for three years on grounds of apparent contraventions. Regulation 4(4) of the IBBI (Inspection and Investigation) Regulations, 2017 provides that it shall be the duty of the service provider to produce before the IA documents, record, or information in his custody or control and furnish to the IA such statements and information relating to its activities within such time as the IA may require. It was alleged that Mr Partha Sarathy Sarkar has not provided crucial information/ documents/ requisite details as sought by the IA, which is his duty under regulation 4(4) of the Inspection regulations. A prima facie view was formed that Mr Partha Sarathy Sarkar has inter alia violated Section 208(2)(a) and (e) of the Insolvency and Bankruptcy Code, 2016 (Code), Regulation 4(4) and 4(7) of Inspection Regulations, Regulation 7(2)(a) and 7(2)(h) of the IP Regulations read with Clause 18 and 19 of the Code of Conduct as specified in the First Schedule of IP Regulations. The whole CIRP hinges on the effective functioning of its duties by the IP, entrusted to him by the Code and regulations. He is the driving force of an effective insolvency resolution system. It was evident that at no point in time, the IP has approached the AA for taking directions on any procedural aspects of the CIRP. The DC observed that the IP has failed to discharge his duties under the Code to bring to the notice of the AA the suspicious transactions. During the hearing, it was informed that there was evidence of an avoidance transaction and he was in the process of finalizing the same for filing before the AA in between the DC Order dated 24 June 2022 which prevented him from filing the same. “However, keeping in view, that nearly a year has elapsed since the last suspension, in the exercise of the powers conferred under section 220(2) of the Code read with IBBI (Insolvency Professionals) Regulations, 2016 and the IBBI (Inspection and Investigation) Regulations, 2017, hereby, suspends the registration of Mr. Partha Sarathy Sarkar having registration no. IBBI/IPA-002/IPN00239/2017-18/10690 for two years.”, Sudhakar Shukla, (Whole Time Member, IBBI), held. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

IBBI suspends Insolvency Professionals for 2 years as on Failure to Discharge Duty under Insolvency Bankruptcy Code

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